Mr BRAITHWAITE(4.09)
—Listening to the debate on the Taxation (Unpaid Company Tax) Assessment Amendment Bill 1983 [No. 2] and the Dividend Recoupment Tax Bill, one would infer that the previous Government and the then Treasurer, the honourable member for Bennelong, Mr Howard, had done nothing to act against the tax avoidance area. I am not saying that that is the complete inference, but I suggest to the House that the measure that we are debating today is an extension of the anti-avoidance measure put forward last year. I would go so far as to say that that was the last anti-avoidance practice that was advocated throughout Australia by the promoters whom the honourable member for Stirling ( Mr Ronald Edwards) mentioned. No one has said in this debate so far that about 36 pieces of legislation came through this House in the last five years, under the previous Treasurer, to block tax avoidance schemes and provide an all- encompassing piece of legislation to counteract these types of schemes from their inception so that action would have to be taken retrospectively against people who engaged in them.

I want to make two vital points. Firstly, the Treasurer (Mr Keating) tried to enter into the field of anti-avoidance but the previous Treasurer had completed the harvest. I say that without any qualification whatsoever. We should not look at this legislation as an extension of a loophole that was plugged 12 months ago ; it has to be seen in its proper light. It seeks to impose an additional penalty retrospectively. I see it as a vendetta by certain people against people who at that time were not engaged in anti-avoidance-I make the point that there is a difference between anti-avoidance and arte-evasion-but were acting within the law. To seek to apply it retrospectively in this case leaves it open for the Government to apply retrospectively any law. We know what the consequences of that are. I have no hang-ups at all in stating my very firm belief that there should be no retrospective legislation in any area. There should be no penalty imposed on people who at the time were acting within the law.

Let us look at the type of penalty that is to be imposed. Let us admit that already company taxation of 46c in the dollar plus the penalty under the legislation of last year has been paid. This legislation seeks to impose, on a maximum basis, a tax of about 66c in the dollar on the balance of that 54c in the dollar after company taxation had been paid. On that basis a person would be left with 18c in the dollar. Who can say that that is not a penalty? One has to look only at the legislation and the rates of taxation paid over the last 10 years to see which governments were high taxing governments. I am not using that as an excuse.

Another point I want to make is that no one in the Opposition, and certainly not the former Treasurer, supported anti-avoidance in any form whatsoever. Certainly from the outside it might appear to be a very easy mechanism to plug the loopholes as they are seen to occur. As a previous chartered accountant, I give credit to the professional bodies in the accountancy field throughout Australia. In deference to the loss of practices which they might have suffered they did behave ethically in most cases. What the President of the Institute of Chartered Accountants said at the Perth convention would have been only a reiteration of what the people within the profession were practising at that time. Anti-avoidance practices were used not so much by professional people but by the professional promoters outside perhaps even of the legal or accounting professions. No-one believes that anybody who benefits from an anti-avoidance measure should be allowed to continue after the practice has become known. On the other hand if we are to give confidence to the business sector-I mention this as just one aspect-we have to make sure that the people who plan their businesses and developments can plan in the security of knowing that what they are doing is legal and that they would not suddenly have imposed upon them a retrospective penalty which I have mentioned, 82c in the dollar, for something that they may have believed was quite legitimate at the time. Nobody either in the previous government or in Opposition at the moment would support those types of practices. There is evidence that the Treasurer of the day did act.

The reasons why the Opposition is opposing this legislation were soundly put by the honourable member for Benelong but there are other areas to which I want to refer. I have mentioned the lack of confidence of business people to do things. Already we have seen this Government contribute to that lack of confidence in certain areas. The withdrawal of the accelerated depreciation rate is just one example and the neutralisation of income equalisation deposits is another. They are legitimate devices. Thus the confidence that Australia needs to get on its feet is being destroyed.

I come back to the aspect of where the taxation burden is falling in this regard. It is falling on after company tax profits. There is a general feeling in Australia that after a government takes 46c in the dollar of the primary taxable income it has taken enough. Yet our laws can impose a triple taxation commitment-once in primary tax, once in the undistributed profits tax and once in the dividend on final distribution. Some people feel enough is enough and 46c in the dollar is all that should be taken out in tax. Already within the period of this Government, we have had the withdrawal of one measure that relieved triple taxation, that is, the exemption from tax of the first $1,000 of dividends from private and public companies. As from 1 July that is no longer a base.

I feel that there is general acceptance in the business world that if a person is to be encouraged to earn a dollar for himself he does not want to share too much of it with the government in Canberra which does not make any real contribution towards the earning of that dollar. If we are to give confidence we have to get the tax rates in Australia down. We have to give confidence by providing certainty in the legislation. In this legislation retrospectivity, the high penalty that is being imposed and the lack of certainty are things that we cannot and should not abide by.

I hope that this will be the Government's last attempt to try to recoup these illegitimate taxes. The Minister for Finance (Mr Dawkins), who is responsible for tax matters when the previous measure was defeated, made a declaration then about reintroducing this measure. It was introduced in the face of much opposition from this side of the House. The deficiencies in that measure have been corrected in this legislation. The deficiencies in the previous measure were such that he was told that he did not know what he was talking about and neither did the back benchers who supported him. I believe that is the truth. If one looks at this legislation one sees that there are enough loopholes in it to recoup more tax than is intended or is healthy for a parliament of this size and with this reputation. It is important to note that the Minister, having been told those things and after the legislation had been defeated in the Senate on the same argument, with the courage of Senate Harradine, said categorically that he would not reintroduce this measure. Yet we have this legislation back in the House in basically the same form and for basically the same purpose-so that the Australian Labor Party can hang its hat on some anti-avoidance measure which it decribed in the life of the old Parliament as being a loss of between $8 billion and $15 billion per year. The trouble with the Opposition Treasury spokesman of the day-I take up the point of the former Treasurer-is that he could not differentiate between tax avoidance, which had been cleared up, and tax evasion. Tax evasion, not tax avoidance, is the problem in this country. As I said, tax avoidance is a field that has been completely harvested by the previous Treasurer. It is in the tax evasion area that the problem lies. Yet the Government tells us that we are soft on tax avoidance. The Government has suddenly become soft on tax evasion.

Legislation relating to the 10 per cent withholding tax was introduced earlier this year. That legislation did not affect the honest taxpayers in the building industry, but it promoted confusion in that industry. That legislation did not come to grips with tax evasion. The first thing that the Labor Party did when it came to office was to lift to $10,000 the ceiling on reportable household work. That is the great area of tax evasion that has not yet been harvested. Householders who employ people at weekends are at risk. That is an area where tax evasion is rife.

What do we see in the present legislation? Again it promotes in business confusion and uncertainty that we certainly would not want. We want a confident business sector which can go ahead and do what it should. I challenge the Government. Where does it stand on tax evasion? I would say that it has certainly gone soft on it. The 10 per cent withholding tax, as the Minister for Housing and Construction and the Minister Assisting the Treasurer (Mr Hurford) very well knows, has made an additional tax collector of many thousands of honest taxpayers throughout Australia. It will create so many little slips of paper which will have to be passed across desks that additional people will have to be employed in business to cope with them. That is the Government's only answer to tax evasion. I challenge the Minister Assisting the Treasurer, who is at the table, the Treasurer or anybody else who might want to do something constructive in this area to recognise that the tax avoidance field has been closed, the promoters are out of business, they have gone broke and it is the tax evasion industry that is crippling this country at the moment, not tax avoidance.

I suggest that the lack of knowledge of the legislation that the Government exhibited in this House in the first sessional period of this Parliament is being repeated here. The mouthing of platitudes by Government members has revealed the fact that they not know what they are talking about. Even the Treasurer this morning displayed ignorance about the matter and the lack of comprehension of what he is about. This legislation is being promoted only for the very dubious reason, I suggest, that should it again be defeated in the Senate it might then become a reason for a double dissolution at some time ahead . I am prepared to say that that may be the only reason that the Government wants to rehash a discredited Bill in such a way.

Mr BRAITHWAITE
—I have often suggested that the honourable member for Hunter might have made a better Treasurer than the one we have. I certainly hope that the seat which is being kept warm for the former Minister of State will be filled with somebody with a bit of competence. At least we can talk to this man. He might know something more about what he is doing than does the Treasurer of the day. I certainly hope he does not regard that as the kiss of death.

The Opposition is firmly opposed to this legislation on very definite bases. This is retrospective legislation and there is no room in a democracy such as Australia for any government or any Parliament to apply taxes retrospectively and impose penalties, such as I have mentioned. There is no need for the Government to put in this legislation a definition of an imputed dividend which is quite contrary to any form of taxation or business practice and to penalise the people as a result. It creates uncertainty. There is a grave difference between normal business practice in the stripping of a company upon dissolution and the way in which this legislation is to be applied. No allowance is made for a sufficient distribution of 80 per cent. The distribution rate was raised by the previous Government to 50 per cent. There is only a factor of an after-tax profit. There is an imputation that there has been a notional distribution of the total amount and that amount will be assessed.

Any reliable accountant who wanted to strip a company would ensure that that distribution was made in such a way that the tax rates would be far less on average than the rates that are being imposed here. I believe this is quite contrary to any taxation practice that has been considered by this Parliament over the years since 1901. This is the first time taxation measures have gone against sound business principles. There can be only one result: If a government is determined to legislate in this way just to vent its spite on some Western Australians, or somebody else how can business in Australia have confidence in planning its economy and its development? Business must be certain that tax laws that apply now will apply in the future. It is on this very definite basis that we take a stand on the principle of retrospective legislation. This legislation offends the first principle of a democracy by retrospectively applying tax. It offends the principles of business and taxation in the manner in which it will be applied.